Insurers Try Rebates To Lead Consumers To Cheaper Care

Would you shop around for a CT scan if you could pocket some of the savings?

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Originally published on March 27, 2012 9:16 am

The way Colin Cooper sees it, people are willing to drive miles out of their way to save a few bucks on gas. Why wouldn't they do the same for health care?

So the CEO of Eastford, Conn.-based Whitcraft, an aerospace component manufacturer, figures his 500 employees will probably be willing to go to a hospital, radiology practice or lab recommended by their health plan if they can take home an extra $50 or $100 for doing so.

The program pays cash rewards, usually about $100, when employees go to cheaper providers than the ones their physician recommends. Nearly 40 services are covered, including mammograms and colonoscopies, knee replacements and cataract surgery. The program is voluntary, and there are no penalties if employees stick with the physician-referred providers.

Like many employers, Whitcraft is self-funded, meaning it pays its employees health care claims directly.

In the face of rising health care costs, "We need to change consumption behaviors," says Cooper. "We need to get people consuming health care the same way they consume everything else."

The cost of an MRI, for example, might vary in price from $750 to $2,000, depending on where someone goes, says Rob Graybill, president of Compass Healthcare Advisers, which manages the SmartShopper program for Anthem.

Some doctors have expressed reservations about the price-driven program, which doesn't factor in quality measures, such as complication rates, into its recommendations. "The issue of quality should always be first and foremost," says Scott Colby, executive vice president of the New Hampshire Medical Society.

But quality concerns don't seem to be stopping consumers from using the program. Anthem first offered the program in New Hampshire in 2010, and now some 53,000 Anthem members and their families have access to it. Of the members who log on or call to check out providers, 61 percent choose to go with the cheaper SmartShopper provider, Graybill says.